Bush Admin Incompetence Strikes Again

The GAO report (pdf) on management of the bailout released on Tuesday follows an oh-so-familiar pattern evident in the litany of failures of the Bush administration that begins with Katrina, the management of the Iraqi occupation, the DOJ politicization, and goes on and on.

TPMMuckraker, specifically Zachary Roth, has been doing an excellent job of tracking through the report and reaction to its contents. Zach made three posts in a row whose content is guaranteed to make any US taxpayer nervous if not outright sick and angry.

His first was from "page 15 of the GAO report on how Treasury is spending the bailout money":

[Treasury's Office of Financial Stability] has not yet determined if it will impose reporting requirements on the participating financial institutions that could enable OFS to monitor, to some extent, how the financial institutions are using capital infusions.

In other words, Treasury may not force banks even to tell the department how the banks using the billions of dollars they're getting. It's a no-strings-attached deal, it would seem.

Next, he notes the report's comment on oversight:

The GAO report makes clear that the urgency of the crisis has meant that oversight procedures have taken a backseat. It concludes in part:

Treasury has not yet set up policies and procedures to help ensure that [Capital Purchase Program] funds are being used as intended.

And then, this one which makes one want to weep with frustration:

Here's a bit more detail, from page 25 of the GAO report, on what seems like the Treasury's utter aversion to requiring banks to offer any information whatsoever on what they're doing with the billions of dollars of taxpayer money they're getting.

[I]t is unclear how OFS and the banking regulators will monitor how participating institutions are using the capital investments and whether these goals are being met. The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.

...
With the exception of two institutions, institution officials noted that money is fungible and that they did not intend to track or report CPP capital separately.

...

The banking regulators indicated that they had not yet developed any additional supervisory steps, such as requiring more frequent provision of certain call report data for participating institutions, to monitor participating institutions' activities.

So it seems to come down to this: the banks won't say what they're doing with the money, and Treasury is too polite to ask.

Too polite? There are other words for this breach of the public trust by the Treasury Department officials. Incompetent seems mildest of them.

There's more in the report. On limiting outrageous executive compensation, Zach noted that "Treasury officials aren't even on the same page with each other about how to enforce the limits -- and some think it can be left to the banks, fox-henhouse concerns be damned."

Conflict of interest issues have surfaced as well:

The GAO report sheds light on another interesting angle to the conflict of interest problem with Treasury's administering of the bailout.

The department has hired outside private contractors to administer parts of the bailout program, notes GAO. Given the reports we've seen about Treasury lacking staff -- and lacking the right staff -- to implement the program, that may be a good move.

But as the report explains, outside contractors aren't subject to the conflict of interest rules that govern Treasury staff. As a result, Treasury asked the contractors to identify potential conflicts. There were many.

Zach goes on to quote a few of the relevant issues and conflicts and it's bad. It essentially says that the contractors hired have said there are conflicts, that some of their clients are entities that will be receiving TARP money, and yet the Treasury people have essentially said 'we trust you'll do the right thing'.

Finally TPMMuckraker reports that Pelosi and Frank had similar negative reactions to the report.

In a statement, Speaker Nancy Pelosi said:

The GAO's discouraging report makes clear that the Treasury Department's implementation of the (rescue plan) is insufficiently transparent and is not accountable to American taxpayers."

And Rep. Barney Frank, who chairs the House Financial Services Committee, agreed, saying in his own statement:

The American people received two kinds of news about the TARP program - bad and worse news.

The bad news was confirmation by the GAO in its first report about the program that Treasury has no way to measure whether taxpayer funds invested in banks are being used in accordance with the purpose of the law - to increase lending. The much worse news is Treasury's response that it does not even have the intention of doing so.

Frank added: "A public hearing on the issues raised by the GAO report is now essential."

Combine that with the willful obstruction of bailout oversight by a Republican senator, likely Jim Bunning of Kentucky, and one must conclude that Republicans want to destroy the US economy and its citizens.

The old truth "By their fruit, ye shall know them" is most germane. Based on their actions, Republicans sure as hell aren't interested in any form of responsible government and no amount of words can conceal that fact.